Associated Press / Craig Mitchelldyer
- A former top Juul executive alleged in a lawsuit filed Tuesday that the company knowingly sold tainted or old products to customers and retailers.
- He describes several instances in which he says he expressed concerns about the quality of the products being sold that were dismissed by his higher-ups.
- In one case, Siddharth Breja alleges that Kevin Burns, then CEO, responded to his suggestions for improving quality control by saying: "Half our customers are drunk and vaping like mo-fos, who the f--- is going to notice?" Burns told Business Insider that he never said "anything remotely close to this."
- The suit adds that Breja was terminated shortly after raising concerns, which he considers to be retaliation by the company meant to hurt his reputation and discourage other employees from speaking out.
- In a statement, Juul denied Breja's claims, and said his allegations regarding Juul's pods aren't true. The company said he was fired "because he failed to demonstrate the leadership qualities needed in his role."
- Visit Business Insider's homepage for more stories.
A former Juul executive is alleging in a lawsuit filed Tuesday that the San Francisco-based company sold tainted pods to customers and retailers and that he was retaliated against for bringing up his concerns.
In the lawsuit filed in the US District Court for the Northern District of California, first reported by BuzzFeed News and obtained by Business Insider, Siddharth Breja, a former senior vice president of global finance for Juul, claims that the company sent to market "approximately one million mint-flavored e-cigarette nicotine pods that it admits were contaminated."
The lawsuit also alleges that CEO Kevin Burns — who stepped down in September as the company suspended its advertising in the US — ruled the company in a "dictatorial manner and fostered a culture of silence."
Breja alleges the company knowingly sold old products
Breja describes several examples in which he says he attempted to speak out against poor practices in the company but was met with disregard from those higher up in the corporate chain.
According to the lawsuit, Breja was alarmed when the company in February expressed a desire to resell pods that were nearly a year old. According to the suit, Breja discouraged the idea and urged his fellow executives to add a "best by" or expiration date to the package.
According to Breja, Burns dismissed the suggestion and said, "Half our customers are drunk and vaping like mo-fos, who the f--- is going to notice?" Breja alleges that the company went ahead with selling old products without labeling their expiration date, despite his protests.
"I never said this, or anything remotely close to this, period," Burns told Business Insider in a statement. "As CEO, I had the company make huge investments in product quality, and the facts will show this claim is absolutely false and pure fiction."
Breja also alleges the company sold "contaminated" e-liquid to customers and retailers
Hollis Johnson/Business Insider
Breja also alleges in the suit that he discovered during an executive meeting in March that some of the mint e-liquid used in the Juul devices had been found to be contaminated. Roughly 250,000 refill kits, equivalent to 1 million pods, containing the tainted liquid were manufactured and sold to retailers and customers.
The lawsuit doesn't say how the pods were contaminated.
In a statement, Juul Labs called Breja's claims "baseless" and said it would fight his lawsuit. The company said Breja was fired "because he failed to demonstrate the leadership qualities needed in his role."
"The allegations concerning safety issues with Juul products are equally meritless, and we already investigated the underlying manufacturing issue and determined the product met all applicable specifications," Juul said.
Breja alleges he was fired in "retaliation" for speaking out
Smith Collection/Gado/Getty Images
Breja expressed his concerns about public safety and then was asked to charge the supplier of the liquid, Alternative Ingredients Inc., $7 million for the bad batches. He was concerned by "this hypocritical approach of not informing the customers about the contamination on one hand (claiming it was not a serious issue) and charging the supplier for it on the other hand," the lawsuit says.
The suit says Breja "protested Juul's refusal to issue a product recall for the contaminated pods, or at a minimum issue a public health and safety notice to consumers."
Tim Danaher, the former CFO, was "angered" by Breja's concerns and "questioned his financial acumen," the suit alleges, since the impact of such a move could have implications in the billions of dollars and would tarnish the brand's reputation.
Danaher also told Breja to "remember his loyalty to Juul," according to the suit.
Breja alleges he was terminated in March, a week after raising alarms about Juul's tainted products. According to the suit, he was told it was because he misrepresented his previous role at Uber, a claim Breja denies.
In a statement, Breja's lawyer, Harmeet K. Dhillon, told Business Insider that Juul fired Breja under "concocted, false pretenses."
"Mr. Breja performed his duty to shareholders, the board, and the public by reporting these issues internally, expecting that Juul's senior management would do the right thing," Dhillon said. "Instead, Juul fired him under concocted, false pretenses, and then sought to smear him to justify its misconduct."
Juul alleges that Breja was fired because he did not "treat others with respect"
In July, Juul Labs Inc. filed a case against Breja, alleging that Breja was terminated "because he displayed serious deficiencies in his management style, his ability to recruit senior leaders, and his ability to collaborate with peers and consistently treat others with respect, and because he had misrepresented his role at his prior company." It added that Breja did not "complain that he had been retaliated against" or "suggest he had ever identified any safety or quality concerns" during his termination meeting.
Juul's proliferation and marketing have recently been tied to a teen vaping epidemic, and several of its customers have reportedly suffered seizures, which Bloomberg said prompted the US Food and Drug Administration to open an investigation into e-cigarette products.
In September, shortly before he left the company, Burns warned against using Juul products and acknowledged that vaping had unknown health risks.
"Don't vape. Don't use Juul," Burns told Tony Dokoupil in an interview that aired on "CBS This Morning."
"Don't start using nicotine if you don't have a preexisting relationship with nicotine," he said. "Don't use the product."
On Tuesday, The Wall Street Journal reported that the company was planning to cut 500 jobs by the end of the year. The company confirmed to Business Insider that the layoffs were part of a company-wide reorganization.
Juul is now worth $24 billion, less than the $38 billion valuation the company hit in December after an investment from the tobacco maker Altria.